South Africa experienced a dip in foreign direct investment (FDI) during the third quarter of 2023, as reported by the country’s central bank on December 14. According to The South African Reserve Bank’s Quarterly Bulletin, FDI inflows in Q3 totalled ZAR26 billion ($1.40 billion), significantly below the ZAR53.8 billion ($2.94 billion) recorded in the previous quarter.
In addition to the decline in FDI, portfolio investments showed an outflow of ZAR41.9 billion ($2.26 billion) in Q3, a stark contrast to the ZAR4.6 billion ($250 million) recorded in Q2 2023.
Comparing FDI levels to previous years, 2022 witnessed an overall FDI of $9.05 billion, notably down from the $40.9 billion recorded in 2021 but still surpassing pre-Covid levels, which stood at $5.45 billion in 2018 and $5.12 billion in 2019, according to UNCTAD.
The US Department of State attributed this economic downturn to entrenched corruption and mismanagement, dubbing it a “lost decade” for South Africa. Factors such as violent crime and energy shortages have further compounded the investment climate, dissuading potential investors.
To address its ongoing energy crisis, South Africa received a $1 billion Development Policy Loan from the World Bank in October. This financial support aims to mitigate the impact of energy cuts, which, in 2022, led to a 2-3% reduction in the country’s GDP growth.
